“There has been a problem in this debate in the past in
that people have said: ‘Well of course there is a difference
between tax evasion, which is illegal and should be pursued by
the full force of the law, and then there is tax avoidance which
is perfectly legal and OK,’” Cameron said in Mumbai today,
during the first of a three-day visit to India.

“The problem with that is that there are some forms of tax
avoidance that have become so aggressive that I think there are
moral questions we have to answer about whether we want to
encourage or allow that sort of behavior.”

The comments come two days after Britain, Germany and
France called on other Group of 20 nations to curb tax avoidance
by international corporations that shift profits to territories
where they can pay the lowest amounts. Closing avoidance
loopholes encourages companies to seek other ways to minimize
taxes, Cameron said. He wants to pile pressure on them to pay
what’s due.

Western nations, seeking to shrink budget deficits, are
looking for ways to raise more money from companies to placate
voters squeezed by falling living standards and cuts to public
spending. The Organization for Economic Cooperation and
Development is working on plans which, if approved by the U.K.,
Germany and France, will be put before the G-20 in July.

U.K. Testimony

“Some would say: ‘Well, just keep changing the law to make
the aggressive avoidance illegal.’ But with respect to many
friends in the accountancy profession it is difficult to do
that,” Cameron said. “There is a legitimate debate to say very
aggressive forms of avoidance are not appropriate.”

Amazon.com Inc. was among three U.S. companies singled out
by U.K. lawmakers last year for not paying enough tax in
Britain. Members of Parliament’s Public Accounts Committee
criticized the online retailer, Starbucks Inc. and Google Inc.
for using complex accounting methods to reduce their tax
liabilities in the U.K.

Testimony by the retailers at a Nov. 13 hearing at times
drew laughter from lawmakers who queried how Amazon made 20
million euros ($27 million) profit on sales of 9.1 billion euros
across Europe and questioned why Starbucks remained in Britain
as it had recorded losses for most of the 15 years it had
operated in the country. Google paid 6 million pounds in company
tax in Britain last year.

The U.K. government said this week it would bar companies
with a history of breaking tax rules from winning government
contracts.

Under proposals published last week in the U.K., companies
bidding for contracts starting on April 1 will have to make a
declaration about their tax compliance, and departments will for
the first time have the power to refuse contracts on the grounds
a company has broken anti-avoidance rules.